G7 and EU plan a new BRI in the making?

Clockwise from left, British Prime Minister Boris Johnson, Japanese Prime Minister Fumio Kishida, the President of the European Commission Ursula von der Leyen, European Council President Charles Michel, Italian Prime Minister Mario Draghi, Canadian Prime Minister Justin Trudeau, French President Emmanuel Macron, German Chancellor Olaf Scholz and U.S. President Joe Biden attend a working session during of the G7 leaders summit at Castle Elmau in Kruen, near Garmisch-Partenkirchen, Germany, on Tuesday, June 28, 2022. The Group of Seven leading economic powers are meeting in Germany for their annual gathering Sunday through Tuesday. (John MacDougall/Pool Photo via AP)

The G7, the big leaders of the world, and the EU have pledged to raise 600 billion US dollars (634.56 billion euros) over five years to finance needed infrastructure in developing countries. In the west, it is considered a counter act of the Belt and Road initiative (BRI) of China. China itself says to welcome additional funds.

Launched as the “Partnership for Global Infrastructure and Investment”, the plan was presented on Sunday 26 June by U.S. President Joe Biden and other G7 leaders at their annual gathering in Schloss Elmau, Germany. The G7 countries include Canada, Germany, France, Italy, Japan, the UK and the US.

The US would mobilise 200 billion US dollars (192,13 billion euros) in grants, federal funds and private investment. The EU would raise another 300 billion dollars (317.28 billion euros). Rather than charity, it was presented by Biden as an investment that would “deliver returns for everyone”.

The purpose

Although the overall purpose was described as supporting critical infrastructure in developing countries, this does not come down to the same, concrete investment in transport links between Asia and Europe as the BRI. Examples are the creation of a submarine cable linking Southeast Asia with the Middle East and Western Europe, or the provision of internet and financial technology in countries in Africa, Asia and Latin America.

The European ambitions are however more in tune with the infrastructure expansion between the continents. European Commission President Ursula von der Leyen explained at the meeting that the EU finds would build up a sustainable alternative to China’s BRI scheme, as was reported by Reuters.

European BRI?

Therefore, a comparison with the BRI of China is not too far-fetched. Chinese President Xi Jinping launched the BRI in 2013, with the aim of providing financing for emerging countries to build infrastructure such as ports, roads, and bridges. Ever since, it has been involved in mega projects in countries such as Greece, Italy, Hungary and Serbia.

The involvement of China in these infrastructure projects has always been observed with caution by the EU, which feared that China would have too much of an impact on the continent. The countries that accepted the investments would be too dependent on China in its development. Moreover, EU parties are not equally able to make such investments in China, EU Commission representatives have explained.

The Chinese response

In response, Chinese industry parties have wondered why the EU itself was not facilitating infrastructure development in these countries, as there is plenty to improve on the European side to make the now so important New Silk Road more successful. If the promised funds will indeed be raised (and directed towards transport infrastructure), this could now become a reality, and the EU may just have found a way to establish its own BRI.

The Chinese government responded positively to the announcement. “China continues to welcome all initiatives to promote global infrastructure development”, Chinese foreign ministry spokesman Zhao Lijian said when asked for comment at a daily briefing in Beijing on Monday (Reuters).

“We believe that there is no question that various related initiatives will replace each other. We are opposed to pushing forward geopolitical calculations under the pretext of infrastructure construction or smearing the Belt and Road Initiative.”

Political or not?

With the latter, he refers to the often heard assumption that the infrastructure investments do not only create financial dependencies, but also support a political goal of expansion from the Chinese government.
Also here, the G7 initiative can be placed in a similar context, especially when considering the notice of Biden that this scheme “would allow countries to “see the concrete benefits of partnering with democracies”.

China is an economic ally of Russia, and ever since the outbreak of the Ukrainian war, Chinese exports via the New Silk Road are increasingly headed for Russia as a final destination, rather than Europe. The time for more financial support of the infrastructure links could have been any of the past 13 years, but instead, it is now.

Author: Majorie van Leijen

Majorie van Leijen is the editor-in-chief of RailFreight.com, the online magazine for rail freight professionals.

1 comment op “G7 and EU plan a new BRI in the making?”

bönström bönström|02.07.22|11:20

Success stories of regions, in Europe, etc. have been based upon nearness, to a port – and vice versa.
(In absence of by water, then railways have been and is the large scale device, for nearness to a port.
“Return for everyone” calls for a meeting with demand, with Market.)
In EU utilisation of existing, upgrading of existing tracks, to 32,5 ton axial load, quickly adds 50% extra capacity – and handsomely pays, etc.
At continents as Africa, Market is different, etc., etc.

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